The median price for a Perth house will pass $600,000 within three years as the city’s property market reclaims its title as the strongest and fastest growing in the country, a new report predicts.

The BIS Shrapnel residential property report forecasts house prices in Perth will climb an average 7 per cent a year for three years, pushing the median price to $610,000 from $500,000 today.

No other capital is expected to enjoy such strong capital growth, with even higher interest rates unlikely to slow the Perth market as much as others.

Senior project manager Angie Zigomanis said even though the Perth market slowed before other cities in 2007, conditions were improving on the back of another resources boom. Money flowing from commodities would soon push up house prices across Perth.

“With prices below peak levels in real terms and income in Perth set to grow substantially as the next round of resource expansion projects get up and running, solid price growth should continue,” he said.

“Nevertheless, further increases in interest rates will prevent the boom in prices that we saw in the last upturn.”

Mr Zigomanis said the median house price would climb 22 per cent by the middle of 2013. This growth would be quicker if the Reserve Bank did not increase interest rates in the next six to 12 months.

Growth at that rate would surpass other capitals such as Sydney (up 20 per cent), Melbourne (11 per cent), Brisbane (12 per cent), Adelaide (20 per cent), Hobart (12 per cent), Canberra (14 per cent) and Darwin (12 per cent).

House prices climbed rapidly through the second half of last year and into the first four months of this year.

Mr Zigomanis said this was directly because of record low interest rates in response to the global financial crisis and a “pull forward” of demand from the first-homeowner’s grant. Not only would house prices outpace inflation, they would affect rents.

“Even though overseas migration inflows are steadily easing, a deficiency of stock is still in place with dwelling construction below underlying trend,” he said.

Recent Australian Bureau of Statistics figures show a fall in loans for people buying homes but an increase in loans for investment properties. Financial market analysts do not expect official interest rates to rise until May next year.

New Housing Minister Bill Marmion has shocked the property market by saying he wants to flood WA with housing lots to cut home prices.

In a speech to Parliament that has set alarm bells ringing throughout the real estate industry, Mr Marmion said the Barnett Government’s aim was to “bring house prices down”.

“The Department of Land is looking at this issue very closely,” he said.

“It owns land and it is looking at its land stocks and will release as much land as possible.

“That will reduce the pressure on housing supplies. Our aim is to bring the median house price down and to have it lower than the median house price in other States.”

Mr Marmion, who took over the job last month after Troy Buswell was sacked, said the only thing the Government could do to achieve its aim was “release more land and houses”. He refused to elaborate on his comments yesterday.

March quarter figures from RP Data put the median house price in Perth at $480,000, equal to Darwin, but behind Sydney ($500,000) and nation-leading Canberra ($510,800).

Hobart had the cheapest prices in Australia at $323,750.

The State Government established an Office of Land and Housing Supply in Thursday’s Budget and is reviewing available government land which Premier Colin Barnett said would “achieve a comprehensive and co-ordinated approach to housing affordability issues”.

Shadow housing minister Mark McGowan warned the policy could result in houses being worth less than what people paid for them.

“If people go into negative equity with their house, that’s the worst possible outcome,” he said.

Real Estate Institute of WA chief executive Anne Arnold said Australians stored their wealth in the family home and it would be “politically unwise for any government to go down that path”.

But the plan won support from developer Nigel Satterley, who said land needed to become more affordable.

But he said the policy would not cut the price of existing houses.

“We’re on the cusp of a block shortage and whatever the Government can do should be encouraged,” Mr Satterley said.

Analysts at RP Data found in April that houses in Perth’s cheapest suburbs cost at least $60,000 more than those in the most affordable areas in the other major Australian cities.

Hillman was named the cheapest suburb in Perth, with a median house price of $280,000 – higher than the cheapest suburb in Adelaide ($200,000), Brisbane ($205,000), Melbourne ($218,000) and Sydney ($219,000).

Perth had less than 10 per cent of its 259 suburbs with a median house price under $350,000, compared with more than 20 per cent in all other big cities.

Blocks of land in Perth were the most expensive in Australia, according to a recent analysis by RP Data and the Housing Industry Association, with a single square metre of “prime earth” now costing an average of $521.

Mining magnate Clive Palmer says his iron ore company has put a West Australian project on hold because of the federal government’s resources super profits tax.

Mr Palmer continued his attack on the government today, saying he is prepared to put everything he has got into fighting the new tax.

He said the board of directors of his company Mineralogy decided to put the brakes on one of his planned Balmoral South iron ore projects in the Pilbara region on Tuesday due to growing uncertainty over the tax.

The project, known as Solomon is expected to cost around US$3,34bn.

Within the next two years Western Australia’s big new iron ore miner Fortescue Metals Group Ltd (ASX: FMG) will decide whether it will open up a new iron ore mining area in the Pilbara of Western Australia.

The project known as Solomon was detailed at the Sydney Mining Club and was said to have a development cost of A$3.6 billion (US$3.34 billion).

Fortescue launched its operations through the Cloudbreak mine in the Chichester Range to export to China through a port developed by the company at Anderson Point in Port Hedland. The company has started development on its second mine, Christmas Creek, also in the Chichester Range.

Solomon is well west of Cloudbreak. It was indicated the company’s capacity out of Port Hedland may cater only for ore from the Chichester hub, so a second port and new rail link would be required to a Pilbara port at Anketell Point – particularly if Fortescue ramps up beyond 155 million tonnes per annum of export ore.

The cost of developing Solomon would take in A$850 million (US$790.8 million) for the mine, a similar amount for the railway, and A$700 million (US$651.3 million) for processing plant

The company claimed that while a lot more drilling was required the Solomon hub had potential to be much larger than the Chichester Ranges operations, currently mining at a rate of 38 Mtpa and gearing to increase to 95 Mtpa.

The Solomon mine could begin at 60 Mtpa, expanding to 100 Mtpa.

While Cloudbreak and Christmas Creek are bedded iron formations, not mined elsewhere in the Pilbara at this stage, Solomon has a mix in its iron ore geology and includes what is known as channel iron deposits.

Sydney Mining Club delegates were told that exploration in the Pilbara in the past five years has yielded reserves and resources for Fortescue of 6.3 billion tonnes, including reserves of 1.6 billion tonnes. The discovery cost was put at A2cents a tonne.

Fortescue’s holdings include a large number of coastal and offshore tenements, assumedly for ironsands shed over the eons. The company also holds coastal and offshore tenements in New Zealand for ironsands.

The new Australian citizenship test which assesses prospective new citizens on their understanding of Australian civics and the responsibilities and privileges of citizenship commences Monday 19 October.

The Minister for Immigration and Citizenship, Senator Chris Evans, said the new test is based on the pledge of commitment that new Australians make when becoming citizens. Topics include Australia’s democratic beliefs, laws and government as well as the responsibilities and privileges of citizenship.

The 20 multiple-choice questions in the new test have been written in plain English and will be conducted in English only. All test questions have been drawn from the testable section of the revised citizenship test resource book, Australian Citizenship: Our Common Bond, which was launched in September.

The new test is not a general knowledge quiz about Australia,’ Senator Evans said. ‘We want people applying for citizenship to understand the values of Australian society, our democratic beliefs, our rights and our system of law and what it means to be an Australian citizen. ‘All prospective citizens should understand those concepts so all of the questions in the new citizenship test focus on the commitments that new citizens make in the pledge.’

The new test was developed after an independent review of the old citizenship test last year found that it could be improved by focusing on the pledge of commitment. People will now need to answer 75 per cent per cent or 15 of the 20 questions correctly to pass – up from 60 per cent under the old test.

However, the mandatory questions have been removed to make the test fairer. All questions are now equally important and a person can no longer answer 19 out of 20 questions correctly and still fail the test because they answered one of the three mandatory questions incorrectly. A citizenship course is also under development to help a small group of disadvantaged people, who for a range of reasons, such as limited literacy and schooling, are likely to struggle when preparing for and sitting a formal computer-based test.

This will ensure that we encourage people to become citizens without the test being a barrier,’ Senator Evans said. The citizenship test resource book, Australian Citizenship: Our Common Bond, and practice citizenship test are available online.

The Federal Minister for Early Childhood Education and Child Care Kate Ellis announced $5.8 million for three new Early Learning and Care Centres in Western Australia.

The Australian Government will invest $5.8 million in building new centres at Karratha in the state’s north-west, and Darch and Mirrabooka in Perth’s northern suburbs.

The Karratha centre will be built at Tambrey Primary School with $2.2 million of Australian Government funding. It will provide 120 new long day care places for Pilbara youngsters.

Woodside Energy will provide more than $4 million over three years to the centre.

“This partnership is a fine example of how the Federal Government and local industry are working together to deliver high quality care and education for Australian children and their families,” Ms Ellis said.

“The Pilbara is key to our nation’s economic development and this service will help companies, like Woodside, to attract and retain a skilled workforce.”

About $1.8 million in Australian Government funding will be invested in centres at Darch and Mirrabooka.

Ashdale Primary School will host the Darch centre and will offer at least 50 new long day care places, while the Mirrabooka Early Learning and Care Centre will also offer about 50 new places.

All three centres will be built by 2010 on land contributed by the WA Government.

The construction of the centres on school sites presents opportunities for future integration of education and care services with junior schooling.

“The Australian Government is working hard to provide families with access to quality early childhood education and care,” Ms Ellis said.

“These centres will also provide more job opportunities and boost local economies.”

The Australian Government is continuing to discuss an Early Learning and Care Centre for Port Hedland with the WA Government.

An Autism-specific Early Learning and Care Centre was announced for Perth last month.

The new centres form part of the Australian Government’s $114.5 million plan to build 38 Early Learning and Care Centres by 2010.

This initiative is part of the Australian Government’s Education Revolution, which is improving early childhood care and education for Australia’s children and families.